Few companies in the IT sector inspire as much confidence in shareholders as Cisco Systems Inc. (CSCO), the leading supplier of software and data networking. The firm produces everything from routers to switches, and offers clients network-management software designed specifically for data communication amongst distant networks.
It is one of the most traded companies among investment gurus, and currently enjoys the backing of John Hussman (Trades,Portfolio), Ronald Muhlenkamp (Trades, Portfolio), and Louis Moore Bacon (Trades, Portfolio). So, let’s take a look at this industry giant and see why it might be a stock worth purchasing for 2014.
Scale Advantages and High Switching Costs
The main advantage of being such an important player in the IT world is that customers are willing to endure higher prices in exchange for continued service. In other word, high switching costs give Cisco a huge advantage over rivals and possible new entrants.
— Guru Focus